The very recent news that Navistar reached a five-year agreement with J.B. Hunt that will result in Hunt buying some 5000 ProStar trucks would seem to put to rest – at least for awhile – the torrent of gloom-and-doom predictions that have surrounded the company since it decided to focus on EGR as its primary emissions strategy rather than the SCR path embraced by nearly everyone else in the business.
The drumbeat was heightened recently by a pair of reports by a financial analyst who proclaimed Navistar’s engine strategy was a dead end – based in part by observations made from a parking lot at one of the company’s engine plants – and that it was going to go back to buying Cummins 15 L engines. Cummins would be glad to hear about that, but even Cummins doesn’t see Navistar retreating in any way from its EGR-only path.
The fact that Navistar is going in one direction and everyone else is going in another has roiled the industry like nothing I have seen in nearly 20 years covering this industry. The financial community is especially agog and is continually searching for concrete, definitive evidence that one technology is a winner and one is a loser. And because groupthink pretty much exists everywhere, conventional wisdom is that the loser has gotta be Navistar.
One very good European journalist who was participating in a recent conference call put together by an investment company, indicated that out in the real world, nobody buys technology per se. Instead, they went with the product that works best, which concerning engine emissions technology, was (in his view) SCR.
He’s exactly right that nobody buys technology. The purchaser for a trucking fleet buys trucks. He or she buys the truck that works best for the drivers, the type of service, the routes the trucks typically run.
But contrary to what a lot of people seem to think, there is more to that “works best” equation than fuel economy. A lot depends on history and tradition. A fleet that has run Kenworth trucks for years is likely to have a comfort level with Kenworth – they know how to service them effectively, they know how to fix them and they may even have some money tied up in service parts inventory. It’s going to take more than just the promise of a fuel economy improvement to get that fleet to change directions toward another manufacturer in a major way.
The local truck dealer can also play a very significant role. If I love my local Volvo dealer and he’s always gone the extra mile to take care of me, I’m probably going to try to buy most of my trucks from him. Similarly, if the other brand’s dealer is a jerk, I probably wouldn’t buy his trucks even if they could wash themselves and serve drinks.
You’ll even see some purchasing based on the unassailable logic of “my daddy drove Macks, his daddy drove Macks, I drive Macks.”
Such factors play a huge role in truck purchasing as does the knowledge that the absolute number one factor that determines fuel economy of a heavy-duty truck is the guy sitting in the driver’s seat. All truckers know this, which is why they have focused so hard over the years on driver training and tools designed to help drivers become better drivers.
All things being equal, SCR might indeed yield a 3% to 5% improvement in fuel economy. It’s just that out on the roads and highways, things are almost never equal.
If you listened to a lot of the chatter lately, you might expect to see a lot of change of market shares in the Class 8 trucking business this year. I think that’s unlikely, since there probably won’t be a significant increase in truck buying this year anyway. A slack tide floats no boats.
Yet it’s also likely that when push comes to shove – at least until there is some real experience with all of the new equipment and positives and negatives of each direction are known – buyers are going to default to their usual positions. If you’ve always bought Navistar trucks, chances are any trucks you buy this year are going to mostly be Navistars. If you’re a Freightliner fan, you’ll buy mostly Freightliners.
It’s reminiscent of the never-ending debate between PCs and Macs. Mac users are passionate in their belief that Steve Jobs’ creations are the ultimate achievement in personal computing. And while they may be correct if measured by speed, performance, capability, etc., the brute fact is that MacIntosh hold less than 10% marketshare, with PCs holding the rest.
No one suggests that MacIntosh is doomed or doesn’t know what it’s doing by going in a singular direction. And it’s not too far a stretch to think that Navistar might be in the same boat.
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